Are You Compliant? Understanding Saudi Arabia's New Ultimate Beneficial Ownership Rules
- Ali Elmahdy
- Aug 8
- 4 min read
Updated: Aug 15
Corporate transparency is a top priority for economies around the world, and the Kingdom of Saudi Arabia (KSA) is no exception. As part of its commitment to a strong, trustworthy business environment and in line with Vision 2030, the Kingdom has introduced mandatory new rules for what's known as Ultimate Beneficial Ownership (UBO).
Starting April 3, 2025, a new law requires many companies to identify and report who their true owners are. This is a significant step toward modernizing the business landscape, helping to combat financial crime, and building investor confidence.
It's no longer enough to just know who owns a company on paper, now, you must know who ultimately holds the power.
This blog post will break down everything you need to know about these new UBO rules in a simple, easy-to-understand way.
Why Are These Rules Happening Now?
These new rules are a clear sign of Saudi Arabia's commitment to global standards. They come from a new part of the Companies Law (Article 274(3)) and are designed to:
Improve Transparency: Make it easier to see who is behind a company.
Fight Financial Crime: Help prevent money laundering and other illegal activities.
Boost Investor Confidence: A transparent business environment attracts more investment.
Align with Global Bodies: The rules follow recommendations from international organizations like the Financial Action Task Force (FATF).
Who Needs to Follow These Rules?
The new UBO rules apply to a wide range of corporate entities, both domestic and foreign, that operate in Saudi Arabia.
This includes:
Partnerships (simple and limited)
Joint stock companies
Limited liability companies
Foreign companies with branches in KSA
Exemptions:
Some entities are exempt from the disclosure requirement. These include companies that are fully owned by the state or that are undergoing court-supervised liquidation.
Even if a company is exempt from disclosure, it must still follow other rules, such as confirming its status annually and cooperating with the Ministry of Commerce.
Who is a "Beneficial Owner"?
The rules define a beneficial owner as the real, living person who ultimately owns or controls a company. They aren't always the person whose name is on the registration papers.
You can identify a UBO based on these criteria:
Ownership: An individual who holds 25% or more of the company's capital.
Voting Rights: An individual who controls 25% or more of the company's voting rights.
Board Influence: An individual who has the power to appoint or remove the majority of the board of directors or managers.
Significant Influence: An individual who can strongly influence key decisions or operations.
The Fallback Rule: If no single person meets the above criteria, the company's CEO or a director is considered the beneficial owner.
Companies must look through complex ownership structures to find the real person in charge.
What You Need to Do: Your Compliance Checklist
Companies must collect and maintain specific information about their UBOs and report it to the Ministry of Commerce.
Data You Must Collect:
Full legal name (in both Arabic and English)
ID number (National ID, Iqama, or Passport)
Date and place of birth
Nationality and residential address
The reason they are considered a UBO
The date of their UBO classification
Reporting Timelines:
Event | Action Required | Deadline |
New Company | Submit UBO data | At the time of formation |
Existing Company | Submit UBO data | At your next commercial registration renewal |
Annual Check | Confirm UBO data | On or up to 30 days before the annual year |
UBO Changes | Update and explain changes | Within 15 days of the change |
What Happens If You Don't Comply?
These rules are not optional. The Ministry of Commerce is authorized to inspect your records and impose penalties if you fail to comply.
Penalties can include:
Administrative fines.
Suspension of your commercial registration.
Referral for further legal action.
The good news is that there are no fees for filing UBO information. This is to make it easier for businesses, especially small and medium-sized enterprises (SMEs), to follow the rules.
How Do These Rules Compare to Other Countries?
Saudi Arabia's UBO regime is similar to those in the UK, EU, and USA. However, there are a couple of key differences:
Privacy First: Unlike many other countries, Saudi Arabia's UBO registry is not public. This protects the privacy of individuals while still giving regulators the information they need.
Focus on Influence: The rules don't just look at ownership percentage. They also consider a person's ability to influence decisions, which is a more thorough approach.
The Elaqat Law Advantage
Navigating these new regulations can be complex, especially for foreign companies with intricate ownership structures. This is where professional help becomes essential.
Law firms, such as Elaqat Law, play a critical role in helping businesses understand and comply with these new rules. They can assist with:
UBO Assessments: Helping you correctly identify your ultimate beneficial owners.
Documentation: Ensuring you have all the required paperwork.
Reporting: Guiding you through the submission process.
Ongoing Compliance: Setting up systems to monitor and update your UBO information as needed.
By partnering with a firm like Elaqat Law, you can ensure your company is fully compliant, avoiding penalties and building a strong, trustworthy reputation in the Saudi market.
Conclusion
Saudi Arabia's new Ultimate Beneficial Ownership rules are a major step in the country's economic evolution. They are designed to create a more transparent and secure business environment for everyone.
By understanding these rules and ensuring full compliance, you're not just avoiding penalties, you're contributing to a culture of integrity and accountability that is at the heart of the Kingdom's future success.
If you are ready to ensure your business is fully compliant, let our team at Elaqat Law guide you every step of the way.
Comments